The Nasdaq composite index surged 247.04, or nearly 8 percent, to 3,418.60--the third-largest percentage gain in its history. The Dow Jones industrial average gained 167.96, or about 2 percent, to 10,142.98, while the Standard & Poor's 500 index advanced 46.63, or 3 percent, to 1,388.76.
On Wednesday the Dow closed below 10,000 for the first time since March.
"The stronger announcements are now starting to off set some of the weaker ones and are leading people back to a thought process that we will not see earnings collapse," said Joe Keating, chief investment strategist with Grand Rapids, Mich.-based Kent Funds, which manages $6.5 billion. "People are thinking, 'OK, maybe the worst is behind us and it's time to start moving some money back into the market now.'"
The gains are "the beginning of some stability," said Brian Belski, a market strategist at U.S. Bancorp Piper Jaffray. "It's a good start (but) we have a lot of earnings to go," he said. "I don't think we're off to the races...We need to see some more positive earnings from companies."
Belski remains optimistic on technology stocks and recommends that investors should think about adding more tech stocks to portfolios.
Nearly three stocks gained for every one that fell on the Nasdaq, which generated a volume of 2.33 billion shares--its sixth-best volume day ever.
More than two stocks advanced for every one that declined on the New York Stock Exchange, which posted a heavy volume of 1.3 billion shares.
Shares of Microsoft rose $10.13, or nearly 20 percent, to $61.88 on a volume of more than 126 million shares, making it the most active stock on the Nasdaq.
On Wednesday the software giant announced earnings that blew past analyst expectations by 5 cents per share. The company said it earned a fiscal first-quarter profit of $2.58 billion, or 46 cents a share, compared with $2.19 billion, or 38 cents a share, during the same period last year. Analysts polled by First Call/Thomson Financial estimated Microsoft would earn 41 cents per share.
The CNET tech index rose 211.49 to close at 2,701.16. Leaders ran circles around laggards, with 86 of the 97 stocks in the index rising, 8 falling and three remaining unchanged.
Chip stocks moved the markets higher. All of the 18 sectors tracked by CNET Investor posted gains. Semiconductor equipment companies led the charge, rising nearly 14 percent, followed by semiconductor makers, which climbed nearly 13 percent. Internet content companies were the day's lowest gainers, climbing a slim 0.32 percent.
Advanced Micro Devices climbed $3.69, or 20 percent, to $21.81; KLA-Tencor soared $6.56, or 23 percent, to $35; and LSI Logic leaped $5.44, or nearly 24 percent, to $28.44.
Among members of the CNET tech index, mobile phone maker Nokia contributed to the rally, rising $8, or about 27 percent, to $38, with a stronger-than-expected earnings announcement.
Nokia said Thursday its earnings rose 42 percent from a year earlier to 1.34 billion euros ($1.14 billion). Sales rose 50 percent to $6.45 billion. The company further calmed worries about the wireless market with reports that mobile phone sales soared 59 percent to $4.65 billion, with the division's operating profit up 42 percent to $910 million.
Wireless and semiconductor companies surged on Nokia's report. Ericsson gained 63 cents to $14. Motorola rose $2.25, or about 11 percent, to $23, and Qualcomm gained $2.19 to $77.
Sun Microsystems, which beat analyst expectations by 5 cents Wednesday, made gains Thursday. The seller of server computers reported net income of $510 million, an 85 percent increase over the same period the year before. Shares of Sun rose $7.44, or about 7 percent, to $117.75.
Investors didn't react favorably to all earnings. Shares of Apple Computer fell $1.19, or 6 percent, to $18.94 after the company forecast a disappointing fourth quarter Wednesday and announced earnings that fell short of lowered expectations. Apple said it earned $108 million, or 30 cents per share, on sales of $1.87 billion. Under the same criteria in the year-ago period, the company had $90 million in net income, or approximately 25 cents per share, split-adjusted.
Investors also did not show much favor for merger partners America Online and Time Warner. AOL fell $1.47 to $45.44, and Time Warner dipped $1.79 to $67.46.
AOL reported quarterly earnings that slightly beat Wall Street expectations, posting a net income of $350 million, or 14 cents per share, excluding certain charges. That slightly exceeded Wall Street expectations of 13 cents a share, according to a survey by First Call/Thomson Financial.